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Langley City's plan to boost DCCs assailed
A proposal to raise development cost charges (DCCs) in the City of Langley is not sitting well with a Langley City developer and organizations which represent builders and developers. They say the rate hike is too steep and could price Langley City out of the market.
But the City says the increase — which in some cases doubles existing fees — is long overdue, and will serve to bring the municipality in line with Surrey and Langley Township.
An invitation for feedback about the rate changes garnered written responses from Marcon Development, which is based in Langley City, the Urban Development Institute and the Greater Vancouver Homebuilders Association.
All of them expressed concerns over the size of the increase and it was suggested the City either phase it in or offer a municipal assist factor of between five per cent and 10 per cent to offset the cost to developers.
Instead, the City plans to maintain its one per cent assist rate and will increase the grace period between the bylaw’s adoption and its implementation from six months to one year — meaning it will likely take effect in July, 2012.
DCCs are fees charged to developers to install and upgrade services — water, sewer, drainage — associated with a given project as well as to provide capital for roads and parks. Because existing taxpayers also benefit from infrastructure improvements, the City pays a portion of associated costs from its capital works reserve, which is comprised of tax proceeds and casino revenue.
Rates should be reviewed every three to five years, said Langley City CAO Francis Cheung, but the City’s DCCs were last set in 2004, based on 2002 numbers.
At the peak of the last building boom, between 2005 and 2008, development costs were escalating at a rate of about 15 per cent per year. Land prices have also risen sharply in the past eight years.
“We fell so far behind,” said Cheung.
The main reason given for the delay is staff turnover within the City’s engineering department.
Setting DCCs is “a huge undertaking,” said Cheung, who authored the existing bylaw when he was the City’s engineer.
“There have been three directors of engineering since then,” he said.
In setting DCCs, staff determine the condition of the City’s infrastructure and plan for its upsizing, to accommodate anticipated growth.
A letter from UDI says the City’s comparison with surrounding communities is misleading.
“DCC rates are higher in (Surrey and Langley Township) because greenfield development is common, so little or no infrastructure is in place and has to be funded prior to development occurring. In the City of Langley, infill development is occurring and a lot of the infrastructure is already in place.”
City staff disagree, however, saying the majority of the City’s aging infrastructure cannot accommodate multi-family dwellings and therefore must be upsized as part of the construction. That means tearing up and replacing existing roads — which costs more than installing lines in undeveloped areas. Utility conflicts and live connections also add to costs.
“The City is pretty much fully developed,” said Mayor Peter Fassbender. “We are faced with significant infrastructure renewal requirements.
“If we don’t do this (raise rates), we’re faced with infrastructure renewal whether we get development or not.
“That may be triggered by the fact that pipes may fall apart. We need to stay ahead of the curve, (as opposed to) playing catch up.”
Under the new bylaw, which passed third reading on Jan. 10, DCCs for single family dwellings and townhouses will roughly double while DCCs for apartments will increase to just under one and a half times the current rate. The greatest increases would affect developers of industrial and commercial property.
Councillor Jack Arnold asked about the discrepancy with industrial properties in the municipality compared to other communities.
“Why are Langley City’s commercial and industrial rates so much higher? Is it because they’re (Surrey and the Township) trying to increase their base and we’re not?”
It’s a proportionate share, said City engineer Gary Vlieg. Because there is limited space available for commercial/industrial development, each must share a higher percentage of the burden.
But it is expected the bulk of the City’s growth over the next 20 years will be residential, he added. And most of that will be in the form of apartment-style dwellings.
“So it’s not that we don’t want it, we just don’t expect commercial and industrial development,” said Arnold.